Reporting on pedestrian life in the D.C. area

How Zipcar uses LivingSocial to corner the car-sharing market

February 9, 2012 - 02:01 PM
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(Photo: Heather Farrell)

Zipcar launched yet another LivingSocial deal yesterday — $29 for an annual membership and $30 in driving credit, a 75% savings just like the deal offered last August. I've had multiple friends perk up at the cheap car-sharing cost. How to refuse? LivingSocial launched the deal early yesterday and said it would expire in the early a.m. hours, but again as in August, LivingSocial has extended the deal for another 15 hours. Feel free to buy yours now.

But these Zipcar deals have real significance, especially given the timing. So far the new deal has created more than 1,800 new Zipsters in the D.C. region, a number growing by the hour. Last August, the company's LivingSocial deal yielded 3,745 new Zipsters.

The timing matters because Zipcar's monopoly officially ended last week with the launch of Hertz On Demand, a new car-sharing company that doesn't even have those annual fees that Zipcar so neatly discounts in its new deal. A second car-sharing competitor, Daimler Car2Go, is poised to officially launch in the near future as it finalizes operating details with the city. Zipcar far outsizes any potential competition as is, but these two deals, both launched well after the time when Zipcar knew competitors were on the way, have the potential to lock down any people who are on the fence with car-sharing and have managed to do so just before these new competitors enter the public consciousness. The car-sharing market isn't infinite. If you have a car, you're not likely to buy Zipcar, Hertz On Demand, or Car2Go services. There are close to 200,000 households in the D.C. metro area without any sort of personal automobile but there's a limit to how many of them will actually consider investing in car-sharing.

Right now, Zipcar claims well over 60,000 members in addition to the other two or three thousand they'll get with this week's deal. Will there be any left for the competition? These two deals alone will have secured more than 5,000 new Zipcar members in the last six months. I've contacted Zipcar's general manager to ask if the deal was arranged well in advance, as Zipcar claimed with the last one, or is an incentive motivated by the onset of new competition. It would make good business sense if it is.

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